INTERVIEW: Randgold CEO To Discuss Moto Buy With Congo Government
25 August 2009 - 2:57AM
Dow Jones News
Even before Randgold Resources Ltd. (GOLD) unveiled its offer
for a Democratic Republic of Congo-focused gold explorer, the
company's chief executive was being reminded by shareholders of the
risks associated with the central African country.
However, these risks can be managed, Mark Bristow said Monday in
an interview ahead of a trip to Kinshasa to discuss with the
government there plans to cooperate in what could be a key gold
mine for the company in years to come.
"This is a challenging part of the world," Bristow said.
"Political risk is high, and logistics risk is even higher."
Bristow said he began talking with management at Moto Goldmines
Ltd. (MGL.T) toward the end of last year and began evaluating a
possible takeover before larger AngloGold Ashanti Ltd. (AU), which
has agreed to partner with Randgold to buy Moto.
"Before any deal was agreed, I saw our shareholders and key Moto
shareholders. I also contacted the government" in Kinshasa," he
said.
He said that while some large Randgold shareholders were
concerned about the potential risk of buying a company whose key
asset is a gold project in Congo, they were responsive to how the
acquisition has been structured to share risk with AngloGold, the
world's third-largest producer of the precious metal.
Bristow said also key to Randgold's decision to proceed with an
offer for Moto was the support of Congo's government, which through
state-owned Offices des Mines d'Or de Kilo-Moto owns a 30% interest
in the Moto gold project.
Follow-up talks with the government will take place this week to
agree to details of their cooperation on the gold project and to
discuss issues such as a hydropower source to power a potential
mine, making use of the road network in nearby Uganda, and the
movement of about 11,000 people in the area so the site can be
developed, Bristow said.
"All of this will need government partnerships," he said, adding
that agreements made now would allow Randgold and AngloGold to move
smoothly toward a bankable feasibility study on the Moto project
after the Moto takeover is completed.
Perth, Australia-based Moto earlier this month accepted an offer
from Randgold that values it at about $500 million, topping a rival
bid from Vancouver-based Red Back Mining Inc. (RBI.T). Randgold,
which is focused on gold mines in west Africa, has separately
agreed to subsequently sell 50% of Moto to AngloGold for $244
million cash that will help fund the Moto deal.
A key attraction to Moto is its Congo project, which AngloGold
CEO Mark Cutifani has said is one of Africa's largest undeveloped
mineral resources. Moto has estimated the advanced exploration
project has a mineral resource of about 22.5 million ounces of
gold.
"We don't need Moto for tomorrow, neither does AngloGold. But if
we didn't take it at a reasonable price, someone else would,"
Bristow said.
Randgold had considered opportunities to bulk up its pipeline of
projects in South America and Russia, but ruled them out in favor
of central Africa. The region, he said, has similarities to west
Africa or about a decade ago and has the potential to see a similar
rise in the concentration of producing gold mines.
He said Congo is in transition, but the government is legitimate
and moving toward a "real" election, and has realized it need to
partner the mining industry in order to benefit from its mineral
wealth.
-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848;
robb.stewart@dowjones.com